FILED
United States Court of Appeals
Tenth Circuit
December 21, 2007
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
JONES, WALDO, HOLBROOK &
MCDONOUGH, a Utah professional
law corporation,
Plaintiff, No. 07-4008
v.
DAVID G. CADE,
Defendant-Appellant,
UNITED STATES OF AMERICA,
Defendant-Appellee,
and
DANIEL L. BARTLEY; SHARON L.
GREEN; KRUSE LANDA &
MAYCOCK, a Utah professional law
corporation; COHNE, RAPPAPORT &
SEGAL, P.C., a Utah professional law
corporation; KINNAMON GROUP, a
Utah corporation,
Defendants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
(D.C. No. 2:01–CV–933–PGC)
Harold A. Chamberlain, Houston, Texas, for Defendant-Appellant.
Karen G. Gregory (Eileen J. O’Connor, Assistant Attorney General, Brett L.
Tolman, United States Attorney - Of Counsel, Robert W. Metzler and John A.
Nolet on the briefs), Washington, D.C., for Defendant-Appellee.
Before TYMKOVICH, McKAY, and SEYMOUR, Circuit Judges.
McKAY, Circuit Judge.
David G. Cade appeals from the district court’s order denying his Motion to
Enforce Court’s Final Judgment in an interpleader action. The district court
apparently treated Mr. Cade’s motion as a motion to clarify its judgment. See
Fed. R. Civ. P. 60(a); Deboard v. Sunshine Mining & Ref. Co., 208 F.3d 1228,
1245–46 (10th Cir. 2000) (explaining a district court may treat a motion to
enforce a judgment as a motion for clarification of judgment). Mr. Cade argues
that the district court erred when it denied his motion and held that the order in
the interpleader action had not extinguished Mr. Cade’s outstanding tax liabilities
to the United States of America.
We exercise jurisdiction over this appeal under 28 U.S.C. §1291. We
review a district court’s ruling on a Rule 60(a) motion for abuse of discretion.
McNickle v. Bankers Life & Cas. Co., 888 F.2d 678, 680 (10th Cir. 1989).
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This case is the second appeal arising from a settlement agreement between
Mr. Cade and Zions First National Bank in which Mr. Cade became entitled to a
$1,750,000 award. Because many claimants, including the Government,
approached Zions asserting their rights to portions of the award, Zions filed an
interpleader motion with the state court and then deposited the fund with the court
after the motion was granted. The Government then removed the case to federal
district court based on its lien on Mr. Cade’s property. See 28 U.S.C. §§ 1444,
2410.
All fund claimants, including the Government, then filed summary
judgment motions in the district court asserting their respective rights to the fund.
The combined amount Mr. Cade’s debtors claimed in their respective motions
exceeded the $1,750,000 in the fund. The claimants “negotiated [a] proposed
settlement without Cade because they were determining the priority of the
claimants” and “the reduced amount of each party’s claim to the fund because the
aggregate claims exceeded” the fund amount. Jones, Waldo, Holbrook &
McDonough v. Cade, 98 F. App’x 740, 749 (10th Cir. 2004) (emphasis added).
The claimants delineated the disbursement priorities and amounts in a consent
agreement they submitted to the district court.
Mr. Cade filed an affidavit expressing reasons why the district court should
not adopt the consent agreement. In it, Mr. Cade stated he “was not a party” to
the consent agreement (R. at 92) and characterized it as a settlement “agreeing to
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the distribution of certain amounts in full satisfaction of [the claimants’]
respective claims to the funds interpleaded in this action” (R. at 91). He also
complained that because the IRS would be “taking a lesser amount than its claim,
the unpaid amount of this asserted claim [would] still be a valid assessment
against Cade.” (R. at 95–96.)
The district court simultaneously granted all the claimants’ summary
judgment motions and ordered disbursement according to their consent
agreement. In its subsequent opinion explaining the disbursement order, the
district court did not discuss lien priorities. This court affirmed the judgment on
appeal. Cade, 98 F. App’x at 749.
The Government’s tax assessment against Mr. Cade in February 2003 was
for $791,867.97, but under the Agreement and the district court’s disbursement
order, the Government received only $575,000. The disbursement order
explained the Government’s claims “were properly assessed, and [the
Government] agreed to a large reduction [sic] Mr. Cade’s outstanding debt.” (R.
at 122.) However, the order then stated:
The court understands that this disbursement completely resolves the
parties[’] claims against Mr. Cade for the relevant claims discussed
here. If not, any interested parties must file briefs within 10 days of
this order demonstrating good cause as to why the disbursement does
not settle their claims against Mr. Cade discussed here.
(R. at 123.) In his motion, Mr. Cade claimed this language extinguished the
Government’s claim against him for the remainder of the overdue taxes because:
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the court stated the Government agreed to a large debt reduction, the order
completely resolved the parties’ claims, and the Government did not file a brief
demonstrating why the disbursement did not fully settle its claims within 10 days.
The district court clarified its order explaining Mr. Cade ignored the words
“discussed here” and misunderstood the limited nature of the issue resolved in the
interpleader action that decided “only various claimants’ priority to disbursements
of certain funds deposited with the court.” (R. at 219.) The Government’s claim
was only “to the funds deposited in the registry of [the district court].” (R. at 70.)
The district court’s statement that the Government had agreed to a large reduction
meant “only that [the Government] agreed to receive $575,000, as its portion of
the $1,750,000 at issue, rather than the [full amount] it sought.” (R. at 222.) The
issue of Mr. Cade’s outstanding tax liability was “never argued before the district
court.” (Id.)
In an interpleader action, “[t]he district court’s [i]n personam jurisdiction
extends only to the fund deposited with the court.” United States v. Major Oil
Corp., 583 F.2d 1152, 1158 (10th Cir. 1978). We have held there is an exception
to this jurisdictional limitation in an interpleader action: if a party interposes a
compulsory counterclaim, the district court has jurisdiction over the compulsory
counterclaim. See Liberty Nat’l Bank, 540 F.2d at 1381. Generally, however, the
only issue in this type of interpleader action is “who is entitled to the fund and in
what proportions.” Major Oil, 583 F.2d at 1159 (internal quotation marks
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omitted). Accordingly, the court’s judgment in an interpleader action is limited to
the fund in question unless a party has asserted a compulsory counterclaim. See
Major Oil, 583 F.2d at 1160; Liberty Nat’l Bank, 540 F.2d at 1381.
Mr. Cade misunderstands the jurisdictional limitations of an interpleader
action. In this action, the district court could only adjudicate claims related to the
fund. Nothing in any of the district court’s orders bars the Government from
independently seeking to satisfy its claim against Mr. Cade for the balance of his
tax liabilities. Furthermore, had the district court attempted to resolve the issue
as Mr. Cade suggests, we would have had to reverse for the district court’s lack of
jurisdiction over Mr. Cade’s outstanding tax liabilities in this interpleader action.
The district court adhered to its proper jurisdictional limitations when it denied
Mr. Cade’s post-judgment motion. We AFFIRM.
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